Foreign investment in Manhattan reached a record $5.5bn (£3.3bn) last year — nearly twice the previous 2007 high-water mark — with Chinese companies leading the charge.
According to real estate brokerage Colliers International, not only did overseas spending on Manhattan real estate set a new record, it also established a new proportional high. Last year foreign investors accounted for 28 per cent of the $20bn (£12bn) worth of office deals completed in the New York district. Seven years ago foreign investment was just $3bn (£1.8bn).
Manhattan has long been a target for deep-pocketed buyers because of the New York office- market’s record of delivering solid gains over time and, with buildings costing over a billion dollars each, allowing investors eager to invest large buckets of money to accomplish that in a single deal, explained Colliers sales broker James Murphy. “There are few places for investors to place large amounts of money into commercial real estate as efficiently as Manhattan,” he expained.
Last year also saw new interest from Asia, with China pushing investment to unprecedented levels. In the biggest transaction, the Shanghai-based property group Fosun joined forces with a local real estate owner to acquire the 60-storey, 2.2m square foot office tower One Chase Manhattan Plaza for over $700m (£423). In a statement Fosun said the building’s long-time owner and main inhabitant “will remain as an important tenant in the building”.
Of equal size was the purchase of a $700m stake in the GM Building by Zhang Xin, a Chinese real estate mogul who controls the Beijing-based developer Soho China. The 48-year-old Burmese-born magnate was recently named as one of “China’s most visible and flamboyant property tycoons” by the London Times.
“These investors have been kicking the tyres here for some time, but they have finally educated themselves enough on the market to feel comfortable and their participation has pushed the market to a record level,” said Murphy.
For the first time in years Canadian investors were forced into second place. The biggest 2013 deal involving north-of-the-border money went to Ivanhoe Cambridge which acquired a near $900m (£544m) stake in 1211 Sixth Ave, a 44-storey, two-million square feet office tower near Rockefeller Center.
And Murphy expects “foreign investment in Manhattan property to continue at the same level as last year or potentially even higher”. Last week it was reported that Canada’s Oxford Properties Group purchased 450 Park Ave. for $575m (£347m), setting a city record of $1,700 (£1,028) per square foot for an office building.
The largest United Arab Emirates deal for 2013 was the Abu Dhabi Investment Authority acquisition of a $650m (£393m) stake in the Time Warner Center. It teamed up with Related, whose chairman is Miami Dolphins owner Stephen Ross, and the Singapore sovereign-wealth fund GIC to acquire more than a million square feet of office space in the Time Warner complex.
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